How the APAC property market performed in Q3

High demand for data centres and discounted properties reshapes the market.

The Asia-Pacific property market is seeing a lot of cross-border actions, with property investments reaching US$36.3 billion in Q3 2024, marking a 15.7% annual increase, according to Knight Frank’s latest capital markets report.

High interest rates and economic uncertainty have reshaped investment strategies, with data centres and discounted office properties becoming key areas of growth, according to industry experts from Colliers, Knight Frank, and Savills.

“We are seeing cross-border investment volume rebounding quite strongly,” Christine Li, Head of Research for Asia-Pacific at Knight Frank said, highlighting a massive $16 billion AirTrunk data centre deal that set a record for the sector.

Data centre space saw a year-on-year growth of 36%, largely driven by artificial intelligence demands. Traditional offices also saw a 17% increase in transaction volume, especially in cities like Singapore and Sydney.

Hong Kong, however, is witnessing a different trend—soaring demand for distressed assets. “In Hong Kong, we actually see a growing interest in distress and capital-loss assets,” said Kathy Lee, Head of Research at Colliers Hong Kong.

Distressed asset deals rose sharply, making up nearly 50% of Hong Kong’s transactions by Q3, compared to just 7% in Q1. Some properties sold at discounts as high as 60%, reflecting investor appetite for quality assets at a discount amid elevated interest rates.

Singapore, meanwhile, posted robust growth, with property transaction values rising by 32.6% quarter-on-quarter, reaching over US$10.2 billion. This growth was powered by landmark deals, such as the 50% stake sale in ION Orchard mall and an SGD 1.6 billion portfolio of industrial properties.

Alan Cheong, Executive Director of Research & Consultancy at Savills Singapore, noted that Singapore’s appeal for high-value assets has kept it resilient despite rising borrowing costs. “Singapore has been driven mainly by the sale of trophy assets and industrial properties,” he stated, though he pointed out that low office yields could limit further expansion in this sector.

Experts are optimistic for Q4 and 2025, with Li forecasting an additional $9-10 billion in cross-border investments in Asia-Pacific by year-end. As high interest rates begin to stabilise, investment opportunities in both discounted and high-demand asset classes are likely to attract more buyers. Li noted, “With Fed easing rates further, I think there will be a boost in terms of the volume going ahead.”